According to Statistics Estonia, in October 2016 compared to October 2015, the turnover of retail trade enterprises increased 2% at constant prices. The deceleration in turnover growth was influenced the most by enterprises engaging in the retail sales of automotive fuel.

In October 2016, the turnover of retail trade enterprises was 537.4 million euros. The deceleration in turnover growth was influenced the most by enterprises engaging in the retail sales of automotive fuel, where the sales decreased 12% compared to October 2015. The turnover fall in these enterprises was partly influenced by the high reference base of October 2015 and acceleration in the price increase of automotive fuel.

The turnover of grocery stores has been rather stable in recent months. In October, the turnover of these stores remained on the same level as in October 2015.

The turnover of stores selling manufactured goods increased 10% compared to October 2015. Turnover increased in all economic activities. The increase was the biggest in stores selling pharmaceutical goods and cosmetics, with sales having increased 15% compared to October of the previous year. An above-average increase in turnover occurred also in other specialised stores, such as stores selling computers and their accessories, books, sports equipment, games and toys etc. (14% growth). In October, the turnover of non-specialised stores selling predominantly industrial goods (e.g. department stores), having shown a small decline in September, went on an uptrend again and grew 3% compared to the same month of the previous year. Turnover increased also in stores selling textiles, clothing and footwear (6% growth), in stores selling second-hand goods and in non-store retail sale (stalls, markets, direct sale) (7% growth), in stores selling household goods and appliances, hardware and building materials (9% growth) and in stores selling via mail order or the Internet (10% growth).

Compared to the previous month, in October, the turnover of retail trade enterprises increased 3%. According to the seasonally and working-day adjusted data, the growth was 1%. In the ten months of 2016 (January–October), turnover in retail trade enterprises increased 4% compared to the corresponding period of the previous year.

In 2016, to publish monthly statistics on retail trade, Statistics Estonia started to use only the VAT declaration data of the Estonian Tax and Customs Board and stopped data collection with the questionnaire “Turnover”. This reduced the response burden of entrepreneurs and Statistics Estonia’s expenditure on data collection, and increased the use of administrative data. Due to the change in the data source, the monthly news release “Retail trade” will focus on the turnover of retail trade enterprises, instead of the retail sales of such enterprises. Statistics Estonia will continue publishing the retail sales indicator of retail trade enterprises on a quarterly and yearly basis. Statistics Estonia published the monthly summary in four working days. For the statistical activity “Economic indicators of trade enterprises”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia performs this statistical activity.

The average wage stood at 1119 euros in the third quarter and its growth rate slowed

The latest data show labour costs continued to increase faster than productivity

Data from Statistics Estonia show that yearly growth in average gross monthly wages slowed in the third quarter of 2016 from 7.8% to 7.1%. The average wage stood at 1119 euros in the third quarter, which is around 45 euros less than in the second quarter unadjusted for seasonal factors. As more holiday pay is paid out in the second quarter, this drop is quite usual. Seasonally adjusted, the average wage was higher in the third quarter than in the second, though the rate of growth slowed.

The latest data show labour costs continued to increase faster than productivity, but the gap between the growth rates narrowed. The average wage in mining has fallen and wage growth in the electricity sector has been substantially smaller than the average for the whole economy and has been decelerating for some time, indicating that companies are able to postpone wage rises in the event of a negative economic shock. A part may be being played in the development of wages in mining and electricity by the location of companies in those industries in Ida-Virumaa, where there is more labour available than elsewhere in Estonia. Service sectors that are doing well and where companies are looking to expand are seeing wage pressure caused by labour shortages and the lacked of skilled labour.

Slower wage growth is also indicated by data from the Tax and Customs Board on the average declared wage paid out, which was up 6.2% in the second quarter but only 5.5% in the third. Tax and Customs Board data do not convert payments to part-time employees into full-time equivalents, as the calculation of the average wage does. The number of part-time workers probably rose faster than the number of full-time workers, which is why the average wage paid out has grown more slowly than the full-time equivalent monthly wage. The median wage1 paid out grew faster than the average in both government institutions and in companies listed in the commercial register, increasing by 6.7% over the year overall. This nudges the median wage steadily closer to the average wage.

1 The median wage is the wage which half of employees earn more than and half earn less than.

• Wage growth remained rapid in the 3rd quarter at 7%, over the year.
• We expect average gross wage to slow to around 5% in 2017.

In the 3rd quarter of 2016, the average monthly gross wage was 1,119 euros in Estonia, up by 7.1% over the year. Net average wage grew also rapidly, by 6.8% in real terms. The growth of gross wages will probably remain around 7% in the remaining months of the year as labour market remains tight. There were about 9,500 job vacancies in Estonia in the 2nd quarter of 2016. The number of job vacancies exceeded 9,000 last time in 2008.

The rapid growth in the average wage is supported by a lack of suitable labour, a 10% increase in the minimum wage, a political agreement to raise the wages of teachers and healthcare workers, and strong domestic consumption that lifts the sales of enterprises selling their products and services in the domestic market. The average gross wage increased in all sectors, except mining, which has been hurt by low energy prices.

The growth of wages in real terms will slow dramatically in 2017, as nominal growth of wages will be somewhat slower and prices will rise. This, in turn, will limit households’ consumption. The substantially slower growth of wage-earners’ purchasing power will be smoothed by a higher employment rate and an increase in social transfers to pensioners and families.

According to the flash estimates of Statistics Estonia, the gross domestic product (GDP) of Estonia increased 1.1% in the 3rd quarter of 2016 compared to the 3rd quarter of the previous year.

In the 3rd quarter of 2016, the seasonally and working-day adjusted GDP increased by 0.2% compared to the 2nd quarter and by 1.3% compared to the 3rd quarter of 2015.

Real GDP growth was positively influenced by net taxes on products. Although at current prices the receipts of alcohol excise duty decreased, compared to the 3rd quarter of the previous year there were increased receipts of both value added tax and the remaining excise duties. At the same time, payments of subsidies grew.

After having declined in the previous four quarters, the industrial sector’s value added grew more than 4%. The fastest growth took place in the production of energy. In the 3rd quarter, both the export and import of goods grew in real terms compared to the same quarter of the previous year. An increase in the export of electronic products and electrical equipment was the main contributor to the growth of export.

The industrial sector includes the following economic activities: mining and quarrying; manufacturing; electricity, gas and water supply; and construction.

The flash estimate of economic growth is calculated only by the production approach using VAT return information from the Estonian Tax and Customs Board and data from various statistical actions of Statistics Estonia which have been obtained by the time of preparing the estimate. Therefore, the flash estimate may differ from the revised estimates of the GDP, which are based on the respective quarterly data and calculated by the expenditure, production and income approaches.

According to Statistics Estonia, in September 2016, the exports of goods increased by 13% and imports by 2% compared to September of the previous year. In the third quarter as a whole exports grew 7%.

In September, exports from Estonia amounted to 1.1 billion euros and imports to Estonia to 1.2 billion euros at current prices. The trade deficit was 62 million euros (in September 2015, it was 161 million euros).

The top destination country of Estonia’s exports in September was Sweden (15% of Estonia’s total exports), followed by Finland (15%) and Latvia (10%). The biggest increase occurred in exports to the Netherlands, Mexico and Germany (up by 33 million, 26 million and 16 million euros, respectively). Compared to September 2015, more mineral products were exported to the Netherlands and more electrical equipment to Mexico and Germany. Exports to the main destination country Sweden decreased by 13 million euros.

The biggest share in Estonia’s exports in September was held by electrical equipment, followed by mineral products, agricultural products and food preparations and miscellaneous manufactured articles. The increase in exports was greatly influenced by the exports of mineral products (incl. motor spirits, shale oil), electrical equipment (incl. communication equipment) and mechanical appliances (incl. industrial equipment). There was a decrease in the exports of agricultural products and food preparations.

The share of goods of Estonian origin in total exports was 71% in September. Compared to September 2015, the exports of goods of Estonian origin increased by a tenth and re-exports, i.e. the exportation of goods imported from a foreign country, by a fifth. The exports of goods of Estonian origin were influenced the most by a rise in the exports of mineral products, electrical equipment and mechanical appliances. Among goods of Estonian origin, the biggest decrease occurred in the exports of agricultural products and food preparations.

The main countries of consignment in September were Finland (13% of Estonia’s total imports), Germany (12%), Lithuania (10%) and Latvia (10%). The biggest rise occurred in imports from the Netherlands, Russia and the Czech Republic. Compared to September 2015, there was a growth in the imports of electrical equipment from the Netherlands, of mineral products from Russia and of electrical equipment from the Czech Republic. The greatest decrease occurred in imports from Finland.

In September, the main commodities imported to Estonia were electrical equipment, agricultural products and food preparations, and transport equipment. The growth in imports was influenced the most by the imports of transport equipment and raw materials and products of the chemical industry. The biggest fall occurred in the imports of mechanical appliances.

In the 3rd quarter of 2016, exports increased 7% and imports 1%, the previous time that exports grew this much quarter-over-quarter was in the 3rd quarter of 2012. Export growth compared to the same period of 2015 was influenced the most by the increased exports of electrical equipment and mineral products. In the 3rd quarter, among destination countries, the biggest increase occurred in exports to Mexico, Romania and the Netherlands.

Three quarters of families are able to save if they need to, and the number of households with savings has risen

Loans have been taken by 41% of families, which is the same as two years ago, and half of the loan liabilities are related to real estate

Around one fifth of families are planning to take a loan in the next year, and most of them already have some loan liabilities

Around 70% of families consider the trajectory of their family to be good and three quarters believe they can make savings if they needed to. The share of families able to save was about the same before the economic crisis, but it had fallen to 65% by 2012. In the immediate aftermath of the economic crisis it was mainly families with higher incomes that saw growth in the ability to save, but in recent years families with average and lower incomes have found that their capacity for saving has improved.

The share of families with savings has increased from year to year together with incomes and the capacity to save. Data from August 2016 show that 66% of families had financial savings in cash or in a bank. In 2014, 59% of families had such savings and in 2012 only 53% did. The share of families with savings increased mainly through families with average incomes, but also to a small extent through families with lower incomes. Even so, less than half of families in the bottom third of the income distribution, with net incomes of up to 350 euros per family member) saved. The savings of Estonian families are quite small and only around half of the families who said how much they had in savings in August 2016 had more than 1000 euros.

Savings are mostly held for a rainy day to provide some safety margin above income, but there was an increase in saving for leisure activities, health, and costs of residential property. The preference was to hold savings on a bank account or at home in cash. Around 6% of families own exchange-traded securities or units in investment funds, which is a little less than 10 years ago.

In August close to 245,000 families in Estonia, or 41% of all households, had loans. These numbers have been relatively stable throughout the past six years, and loans are mostly taken for buying, building or repairing homes. However, there has again been growth in in car leases and in the use of instalment payments from shops. Higher incomes have slightly reduced the principal and interest payments of loans as a percentage of income, and that figure is below 20% for more than half of families with loans. The households with the greatest difficulties are those whose monthly loan repayments exceed 40% of their income, and 8% of the families with loans were in that category.

In the past year, 9% of families in Estonia have wanted to take a loan to buy or renovate a property. A little over half of them had their loan applications granted, which is about the same as in 2014. About as many families are planning to take a loan in the next year as did so in 2014, and 70% of them already have some loan liabilities

The survey by TNS Kantar was conducted in August this year and covered 984 families, with respondents aged between 18 and 74. The survey was commissioned by Eesti Pank.

TNS Kantar has been conducting the F-monitoring survey since 1998. The survey maps changes in how Estonian residents use money and in the options and desires behind their financial behaviour.

Economic growth in Estonia continued to be weak in the 3Q. According to the flash estimate, Estonian economy grew 1.1% yoy and 0.2% qoq (seasonally and calendar adjusted). The GDP has increased 1.1% yoy during the first three quarters. We shall probably revise slightly down our GDP forecast made in August.

Despite this meagre growth, industrial sector value added reached to the growth in the 3Q, after a year of decline, value added growth in manufacturing accelerated and energy production showed a robust volume growth, as well. According to the flash estimates, value added in transport and ITC sectors and in wholesale and retail trade increased. Although, private consumption is expected to slow gradually, retail trade growth is still strong. GDP growth was inhibited by the poor harvest in agricultural sector and the decrease in the number of employees in public sector that reduced value added in public administration.

Although the foreign trade statistics and export turnover in manufacturing showed accelerated growth of export of goods, the same indicator, after certain adjustments, in GDP slowed down compared to the second quarter. The growth of import of goods decelerated, as well.

All economic sentiment indicators have gradually improved in Estonia. The growth of corporations’ credit portfolio has accelerated this year, which refers to the improved investment activity among enterprises. Households credit portfolio and investments in dwellings have increased with the moderate pace, as well. Investment growth is restrained by government sector, who has used only a small amount of money from the EU structural funds allocated for Estonia for the period in 2014-2020.

Many of these indicators refer to the gradual improvement of economic situation in Estonia. In addition, job vacancies have increased and nominal growth of wages is robust.

Although we expect the deceleration of economic and import growth in Sweden, UK and Germany, the average import demand of the major export partners for Estonia is expected to improve in 2017. This is expected to offer more export possibilities for Estonian enterprises. In addition, we expect that government will increase the payments from the EU funds in next year and will contribute positively to the investment growth. Producer and export prices are increasing and this is expected to improve enterprises turnover, including export turnover. At the same time, negative risks in the global economy and trade are substantial. Estonia’s new government, currently under formation, will likely bring about changes in economic policy, but before the coalition agreement has been put in place, it’s too early to assess these impact on the Estonian economy.